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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






2. Exists at the point where the quantity supplied equals the quantity demanded






3. Entry of new firms shifts the cost curves for all firms downward






4. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






5. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






6. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






7. TR = P * Qd






8. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






9. The imbalance between limited productive resources and unlimited human wants






10. A good for which higher income decreases demand






11. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






12. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






13. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






14. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






15. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






16. Demand for a resource like labor is derived from the demand for the goods produced by the resource






17. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






18. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






19. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






20. Exists if a producer can produce more of a good than all other producers






21. The ability to set the price above the perfectly competitive level






22. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






23. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






24. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






25. Product demand - productivity - prices of other resources - and complementary resources






26. Models where firms agree to mutually improve their situation






27. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






28. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






29. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






30. The price of a good measured in units of currency






31. 0 < Ei < 1






32. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






33. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






34. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






35. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






36. Ed > 1 - meaning consumers are price sensitive






37. Ed < 1






38. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






39. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






40. Entry of new firms shifts the cost curves for all firms upward






41. A firm that has market power in the factor market (a wage-setter)






42. Two goods are consumer substitutes if they provide essentially the same utility to consumers






43. A good for which higher income increases demand






44. The practice of selling essentially the same good to different groups of consumers at different prices






45. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






46. The most desirable alternative given up as the result of a decision






47. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






48. The lost net benefit to society caused by a movement away from the competitive market equilibrium






49. ATC = TC/Q = AFC + AVC






50. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0